Correlation Between KB Financial and Union Bankshares

Can any of the company-specific risk be diversified away by investing in both KB Financial and Union Bankshares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KB Financial and Union Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KB Financial Group and Union Bankshares, you can compare the effects of market volatilities on KB Financial and Union Bankshares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KB Financial with a short position of Union Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Union Bankshares.

Diversification Opportunities for KB Financial and Union Bankshares

-0.85

Correlation Coefficient

KB Financial  Union Bankshares

Pay attention - limited upside

The 3 months correlation between KB Financial and Union is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares and KB Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KB Financial Group are associated (or correlated) with Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of KB Financial i.e., KB Financial and Union Bankshares go up and down completely randomly.

Pair Corralation between KB Financial and Union Bankshares

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.15 times more return on investment than Union Bankshares. However, KB Financial is 1.15 times more volatile than Union Bankshares. It trades about 0.11 of its potential returns per unit of risk. Union Bankshares is currently generating about -0.15 per unit of risk. If you would invest  6,578  in KB Financial Group on May 6, 2025 and sell it today you would earn a total of  1,190  from holding KB Financial Group or generate 18.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

KB Financial Group  vs.  Union Bankshares

KB Financial Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Union Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KB Financial and Union Bankshares

The main advantage of trading using opposite KB Financial and Union Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Union Bankshares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Union Bankshares will offset losses from the drop in Union Bankshares' long position.

The idea behind KB Financial Group and Union Bankshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.